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:' THE TARGET IS YOU!

If you have issues viewing or accessing this file contact us at NCJRS.gov.

GARY W. FLAKNE Hennepin County Attorney 400 Courthouse Minneapolis, Minn. 55415

CITIZENS PROTECTION DIVISION

Telephone: 348-4528

Dear Fellow Citizens:

All of us are consumers. We buy things -- goods and ser.vices -- to meet our needs. When we make a . purchase, we are entitled to full value for our money. We are fortunate that the great majority of business people are honsst and reputable. .

However, there are those who are outto see that we do not get what we pay for. Sometimes, by false . representations, they sell us things we really do not want or need. Other' times. we get considerably less than what we pay for, or nothing at all. This pamphlet tells of some of the more common means by which consumers are cheated and defrauded. It describes the pitfalls to be avoided so that you need not be the next victim.

A high priority of my office is to protect you from. and alert you to, possible deceI>tive and fraudulent prac­tices. I have established a Citizens Protection Division to combat this type of wrongdoing. Call or write:

Mr. Floyd Olson, Assistant County Attorney Chief, Citizens Protection Division 248 Courthouse Minneapofis, Minnesota 55415 Telephone: 348-4528

Working together, we can serve notice that our county will not tolerate deceptive practices.

Sincerely yours,

41d#4~' ~ry ,. Flakne Hennepin County Attorney

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TABLE OF CONTENTS

3. SOME COMMON SCHEMES Free Prize Gimmick Bait and Switch Door to Door:"~lJrveys Referral Rebates~;" Chaln Letters ':,:,

4. TIPS FOR THE BUYER Shop With Purpose The Moment of Truth -­Signing the Contract Credit Card Holders Horne Solicitation Sales Unsolicited Merchandise

6. CONSUMER CREDIT Unlawful Contract Provisions Interest

Simple Interest Other Calculation Methods Add-on Interest Compound Interest How Long is a Year? When Repayment is Early Charges Other Than Interest

The Real Cost of Financing Annual Percentage Rate Truth In Lending Interest Time Price Sales Balloon Payments

16. RENTING A HOME Renting versus Buying Security Deposits, Automatic Renewals Substandard Housing

18. PURCHASING A HOME The Purchase Agreement

19. HOME IMPROVEMENTS

20. LAWS TO HELP THE CONSUMER Auto Mileage Tampering Dating of Perishable Food Gasoline Price Disclosure Drug Price Disclosure Hearing Aid Purchases Disclosure of Funeral Expenses

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22. GARNISHMENT

22. BANKRUPTCY

23. EMPLOYMENT AND COLLECTION AGENCIES Employment Agencies Collection Agencies

24. HOW TO HANDLE SMAll CLAIMS

25. FRANCHISES AND PYRAMID DISTRiBUTORSHIPS Franchising Pyramid Distributorst,\ips

26. NURS!NG HOMES

26. PARENTS LIABLE FOR CHILD'S VANDALISM

27. CONSUMER PROTECTION AGENCIES

28. HENNEPIN COUNTY GOVERNMENT

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SOME COMMON ~ SCHEMES ("'~

We could write a book",,~,b'Jut the endless varieties of frauqH,!~~~.~~81~~mes concocted for unwary congt:lmers; Here;',.are a few examples you are likely to expem~nce.

Ei~~" Prize Gimmick ':\~:!i. ( You win a prize for a contest you never en­tered, You win a free gift as an Introductory offer. Sound wonderful? Watch out! The "free gift" as an introductory offer is'condi­Honed 01'\ your signature to a service con­tract, or on your purchase of other items at a price more than ample to pay for the ap-parent "give away" . "';p

The "contest" you "win" is usually no Bon­test at all, but merely a scheme to gain your confIdence. The game is to entice you to buy at a premium price things you don't need or want.

f3ait and Switch

A "lead item" Is advertised at an ex­ceptIonally low price -- and sometimes a free gift is thrown in for good measure. When you arrive at the shop to make the purchase, you are told that the "lead Item" Is sold out, or that the newspaper advertIsement Was a misprint. Sometimes the bait Item is even "down graded" by the salesperson, who then urges you to buy a substitute item -- natu­rally at a much higher price.

'"iiliMI '

n:'l .. ,~,\~" !!2!!!:..to Door Survey~ 1~

The caller announces that he Is conducting a survey and wants tCi come Inside. Be on your guard: Such an etpproach may be used by people to sell you unwanted merchandise. Worse yet, carelessly tallowlng strangers Into your house could make you the victim of s,oma vIolent crime. Ivlost legitimate surveys

3

can be conducted briefly and at the door. Be sLire you know the identity of anyone whom you allow into your living room.

Referral Reba~~

This trick is also known as the "rags to riches by rebate plan.~' The salesperson In-forms you that the item he is selling will cost you little or nothing. Since you are well known in the neighborhood, your endorse-ment of the product is in demand. For every sale Nhich originates from your referral of friends and relatives you are tore¢e\i&l,~i'C:1t ",:'\?~, commission. You buy. Someh6w""'your' popularity dwindles -- there are, no rebates!

Chain Letters ,,,

The c~ain letter (usuallygontaining ten names) directs that you send.:~moi1ey or some valuable item to one of the p&rsons named in the letter. You are assured that you will receive a bonanza of money: or gifts by add­ing your friends' names to the chain. look Out! There isn't enough money or prizes to go around. Somebody is going to be short changed. .

TIPS FOR THE BUYER

Shop' with Purpose

Before Signing a sales contract or making a large cash purchase ask yourself these questions:

1. Do , know what I'm buying? 2. If there is a contract, have I read it

carefully? 3. Is this product the only thing that will

fill my needs or will something else do jUst as well?

4. Can I get substantially the.same item at a better prlce:elsewhere?

5. If the purchase is for credit, what Is the lowest price available for the loan?

6. What kind of protection (such as guarantees and warranties) do , have?

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,,::ii'!I'i The Moment of Truth.::~Sjgning the Contract

Your intended purch~§:E:} may be based on a written contract. It migHf be labeled by some such name as "purchase order" or I<im~tall­ment agreement". This legal document could bind you for years. The average citizen simply does not know the complicated laws applicable to contracts. At least big pur­,chases (such as buying a house) should

",never be made without the assistance of an attorney. For smaller purchases, you can protect yourself against some of the

,common pitfalls by taking a few ::precautions:

1. Never permit a salesperson to pressure you or rush you into signing a contract. An honest salesperson would prefer that you be satisfied with your purchase. Think it over! Haste can cause you to obligate yourself to a written contract which you wHi regret tomorrow.

2. Reade.y.e.ry contract carefully, and if you do not u,n'cferstand it, do not rely on the salespers'on's explanations. What the sales­person told you may not count. Under certain circumstances the judge could rule that the important thing is the wording of the con­tract you signed.

3. Know the exact cost of the purchase. Interest rates are deceptive .. Consumer credit is a complex and often mystifying area of the law. You may encounter such terms as Truth in :Lending, the annual percentage rate, time price differential, carrying charges, premium insurance, balloon or accelerated payments and deferred payments. Remember, if you are confused call your lawyer or one of the agencies listed on page 27.

Credit Card Holders

A credit card holder can demand in writing that the company who issued the credit card correct mistakes ormake adlustments on the billing statement. The company has 30 days after receipt of the written demand in which to correct your account. Any business Issuing a credit card must provide the namej

address, and telephone number of the de~ 5

partment 'designated to receive such a f:~~est, Failure to do So Is a violation of the )!';f'\t Home Solicitation Sales "":1.'\\.\:

an~a~e:;)~':i~~~~~~ ~e~ar~~ ~~ "r::~(e hfh~~;\'~ $25.00 are required bY''1aw to inform you of 1. your right to cancel the sale.in cases where 1:

you did not initiate the contact with the sales i ,I!"

persoD.

If you sign an agreement with a door-to~ I door salesman, he must furnish you with all copy of the contract showing the date of the transa.ction. You may cancel the contract at I'

any time until midnight of the third busnness ' day after the day on which the sale octCured, ! You can accomplishthis by simply mailing al I notice or sending a telegram to the seller at

tthhS Pth,ace sdPeCifie? din Tthhe agr,eement within 1

e ree ay peno. e se ler then, must 1 return the amount you have paid him. In turn, I

the buyer must give back the goods sold in I substantially as good condition as when re- 1. celved from tile seller. These things are to be I!,

accomplished within 10 days of the date of the notice of cancellation. If the seller fails to return your money and has not complied I within 20 days of your notice of cancellation, I you may keep the goods but you need not make any further payments.,

Unsolicited Merchandise it., I If you receive goods addressed and mailed

to you and which were not solicited by,.you, you have the option of rejecting the mer­chandise, or keeping the goods without any obligation to payor respond to the sender.

CONSUMeR CREDI)'

Unlawful Contract !BUnGEr \ Provisions . ~ ! ,~~ , '~

Several provisions are prohibited 'by I~w from being made a part of a contract In COUl-

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sumer credit sales. These clauses may be disregarded by the buyer. The forbidden provisos Include:

1. A waiver or release of claims or de­fenses against anyone (such as a fin­ancle company) who buys the contract from the original seller.

2. An arbitrary acceleration of payment of the debt, except In cases where the consumer Is in/~tefault. ,\t>,i&; ,(Wi

3.A confession pE'judgmeA't'?\)r assrgtB ment of wages' to the creditor.';'

4.:,t\ grant oft~~ufhorlty to the credItor un-18'1'fully to" enter the consumer's pre~

:: mlses to repossess the goods. ,; 5::"A waiver of any, lawsuit against the'

seller or person holding the contract, based on unlawful methods of collect~ Ing payments or repossessing goods.

6. A release of any legal remedy that the consumer may have against the selier, . whether stated in the sales contract or other separate document in connection with the sale. . If, your contract has any of these provi­SIOns, call your lawyer or Clllle of the agencies I isted on page 27.

Interest * , "Interest represents the price borrowers pay

to lenders for credit over specified periods of time. The amount of Interest paid depends on E\ number of factors: the dollar amount lent or borrowed, the length of time involved In the transaction, the stated (or nominal) annual rate of interest, the repayment schedule, and the method used to calculate interest," SIMPLE INTEREST "The various methods used to calculate

Interest are basically varlatlons of the simple Interest calculation method." . "The basic ~oncept underlying Simple Interest Is that mterest is paid only on the original amount borrowed for the length of time the borrower has use of thf) credit. The amount~~_rr_o_w_e_d_is __ re~f~er~re~d~to~as~th~e~p~r~in~c~l-* Excerpts on pages 7-14 reprinted from

"ABC's off Figuring Interest" Business Cond!­tlO.J.1§, September, 1973, Federal Reserve Bank of Chicago.

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pal. In the simple Interest calculation, in~ terest is computed only an that portion of the original principal stili owed.

ItExample: Suppose $1,000 is borrowed at 5% and repaid In one payment at the end of one year. Using the Simple interest calcu­lation, the Interest amount would be 5% of $1,000 for one year, or $50, since the bor~ rower had use of $1,000 for the entire year.

"When more than one payment Is made on a Simple interest Ipanl the method of com~ puting Interest IS';referred to as:'interest on the declining balance'. Since the borrower only pays interesf.'on the amount of original principal which ha,s not yet beeJl repaid, in­terest paid willbe'smaller the more frequent the payments. At the same time, of course, the amount of credit the borrower has at his disposal is also smaller."

OTHER CALCULATION METHODS

"Add-on interest, bank discount, and compound interest calculation methods differ from the simple Interest method as to when, how, and on what balance interest Is paid. The 'effective annual rate', or the annuaf percentage rate, for these methods Is that annual rate of interest which vvhen used in the simple interest rate formula equals the amount of interest payable in these other calculation methods. For the. declining balance method, the effective annual rate of interest is the stated or nominal annual rate of Interest. For the methods to be described below~ the effective annual rate of Interest differs from the nominal rate."

ADO-ON INTEREST

"When the add-on interest method is used, Interest Is calculated on the full amount of the original principal. The interest amount is immediately added to the original principal and payments are determined by dividing princip~aj plus interest by the number of pay­ments tc; be made. When only one paymen~ is Involved, this method produces the same effective interest rate as the simple interest method. When two or more payments are to

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be made, however, use of the add-on interest method results In an effective rate of interest that is greater than the nominal rate. True, the interest amount is calculated by applying the nominal rate to the total amount borrowed, but the borrower does not have use of the total amount for the entire time period if two or more payments are made~'

"Add-on interest: the more frequent the pay­ments, the higher the effective rate

',' effective annual mill" (percent)

100

60

5.0

L, IIIIII 11,1" IIH III!! It H' 'II' II! LU.J .. u.J!" , "II!' o 12 24 36 48

number of payments during the year

• Based on 5 percent add-on, one·yrmr loan,"

COMPOUND INTEREST

"When the compound interest calculation Is ' used, interest is c~tculated on the original prinCipal plus all interest accrued to that point in time. Sfnce interest is paid on Inter­est as well as ~::m the amount borrowed, the effective interest rate Is greater than the nominal interest rate. The compound interest rate method is often used by banks and savir;~s institutions in determining interest they ~AY on savings deposits 'loaned' to the institutions by the depositors.

Example: Suppose $1 ,000 is deposited In a bank that pays a 5 percent nominal annual rate of interest, compounded semi-annuaUy (I.e., twice a year). At the end of the first half-year, $25 in interest (5 percent of $1,000 for one-half year) is payable. At the end of the year, the interest amount is calculated on

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• the $1,000 plus the $25 in interest alrea~y paid, so that the second interMt payment is $25.63 (5 percent of $1 ,025 for \'me-half year). The interest amount payable for the.#ear, then, is, .. §25 plus $25.63, or $50.63. Tn'e ef-

, fectiverMe of interest is 5.063 percent Which is greater'than the nominal 5 percent rate. The more often interest is cQmpounded within a particular time periodj'the greater will be the effective rate of interest." .

"Compound interest: Qver time, compound­ing increases the amount of interest paid

cumulative mterest amounts' (dollars) 1,250

1.000

750

. ·500

, 250

o ' I ! I I I I "

o 5 10 15 number of years

• Amo<Jl1t paid on $1,000 ,I! 5 porcental1nual interest "ille. "

HOW LONG IS A YEAR?

Hln the above examples, a year is assumed to be 365 days long. Historically, In order to simplify Interest calculations, financial Institutions have often used 12 30-day months, yielding a 360-day year, If a 36Q-day year Is assumed in the calculation and the amount borrowed Is actually used by the borrower for one full year (365 or 366 days), then Interest is paid for an additional 5/360 or 6/360 of a 'year'. For any given nominal rate of interest, the effective rate of Interest will be greater when a 360-day year Is used In the Interest rate calculation than when a 365-day year Is used. This has come to be known as the 365-360 day method."

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WHEN REPAYMENT IS EARLY -THE"RULE OF 7811

"In the above examples, It was assumed that periodic loan payments were always made exactly when due. Often, however, a loan may be complet~ly repaid before it is due. When the declining balance method for calculating Interest Is used, the borrower Is not penalized for prepayment since interest is paid only on the balance outstanding for the length of time that amount is owed. When the add-on interest calculation Is

. used, however, prel?~yment impUes that the lender obtains sorrJ):j: interest which Is un­earned .. The borrower then is actually paying an even higher effective rate since he does not use the funds for'the length of time of the original loan contr1?:cl.

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soine loan contracts make provisions for an Interest rebate if the loan is prepaid. One of the common methods used in determining the amount of the Interest rebate is referred to as the (Rule of 78' .

Application of the Rule of 78 yields the percentage of the total Interest amount that Is to be returned to the borrower In the event of prepayment. The .. percentage figure is arrived at by dividing .the sum of the integer numbers (digits) from one to the number Qif payments remaining by the sum of the digits from one to the total number of payments specified In the original loan contract. For example, if a five month loan is paid off by the end of the secorid month (i.e., there are three payments remainl.ng), the percentage of the Interest that the lender would rebate Is 1 +2+3::;6+1 +2+3+4+5:15, or 40 pl)r­cent. The name derives from the fact that78 is the sum of the digits from 1 to 12 and, therefore, Is the denominator in calculating Interest rebate percentages for all 12-period loans.

Application of the Rule of 78 results In the borrower paying somewhat more Interest than he would have paid with a comparable dElcllnln~ balance loan. How much more depends on the effective rate of Interest charged and the total number of payments specified In the original loan contract. The higher the effectlve rate of Interest cha~ged and the greater the specified total number of

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payments, the greater the amount of Interest figured under the Rule of 78 exceeds that un~ der the declining balance method.(See chart).

The difference between the Rule of 78 in­terestand the declining balance interest also varies depending upon when the prepayment occurs. This difference over the term of the loan tends to increase up to about the one­third point of the term and then decrease after this pOint. For example, with a 12-month term, the difference with prepay­ment occurring in the second month would be greater than the difference that would occur with prepayment in the first month; the third-month difference would be greater than the second-month differencej the fourth month (being the one-third point) would be greater than both the third-month difference and the fifth month difference. After the fifth month, each succeeding month's difference would be less than the previous month's difference."

«lnt~rest paid under the Rule of 78 is always more than under the decHning balance-

but how much more depends OIn:

The term of the original loan !Contract dllfetcn~e in mterest POld (de: lors pr,r $100 of Inferest) t60

'2% loon

month loan repaid

12

,j ii q II Ii ;j

II "til I I 1

II Ii

II il ! I I l Il Ij Ii fl

I~ I ~

11

Ii I ,.

,. 1j .

The effective annual rate of interest

12~monlh loon

CHARGES OTHER THAN INTEREST

"In addition to the Interest which must be paid, loan agreements often will Include other provisions which must be satisfied. Two of these provisions are mortgage points and required (compensating) deposit balances.1I

MORTGAGE POINTS

IIMortgage lenders will sometimes require the borrower to pay a charge in addition to the interest. This extra charge is calculated as a certain percentage of the mortgage amount and is referred to as mortgage points. For example, if 2 points are oharged on a $10,000 mortgage then 2 percent of $10,000, or $200, must be paId In addition to the stated interest. The borrower, therefore, is paying a higher price than if points were not charged-I.e., the effective rate of inter­est Is increas,ed. In order to determine what the effective rate of Interest Is when points are charged, It Is necessary to deduct the dollar amount resuitlng from the pOint cal .. culatlon from the mortgage amount and add

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It to the interest amount to be paid. The bor· rower Is viewed as having the mortgage amount les$ the polpt charge amount rather than the entire morfgage arnount.

Example: Suppose that 2 points are charged on a 20-year, $10,000 mortgage where the rate of Interest (declining balance calculation) Is 7 percent. The payments are to be $77 .53 per month. Once the borrower pays the $2()0 point charge, he starts out with $9,800 tID use. With payments of $77.53 a month over 20 years, the result of the 2 point charge is an effective rate of 7.262 percent.

The longer the tlme period of the mortgage~ thE! lower wlWbe the. Mfective rate of interest when points are charged because the point charge Is spread· out over more payments. In the above example, if the mortgage had been for 30 years Instead of 20 years, the effective rate of Interest would have been 7.201 percent."

REQlIlRED (C()MPENSATING) DEPOSIT BAL/lINCES

"A bank may require that a borrower main­tain a certain percentage of tll~.loan amount 011 deposit as. a condition for 'obtaining the loan, The borrower, then, does not have the use of the entire ioan amount but rather the use of the loan amount less the amount that must be kept on deposit. The effective rate of Interest Is greater than It would be if no com­pensating deposit balance were required.

Example: Suppose that $1,000 Is borrowed at 5 percent from a bank to be paid back at the end of one yeal'. Suppose, further, that the lendln'gbank requires that 10 percent of the loan amount be kept on de­posit The borrower, therefore, has the use of only $900 ($1,000 less 10 percent) on Which he pays an Interest amount of $50 (5 percent of $1,000 for one year). The effective rate of interest IS, therefore, 5.556 percent as op· posed to 5 percent \ivhen 1'10 compensating balance is required."

THE REAL COST OF FtNANC~NG

Very few consumers know how much of their purctiBlse money represents credit

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charges. There are good reasons for being confused. In addition to the several ways to compute Interest we have just discussed, the consumer must reckon with the distinctions between Interest and such terms as annual p'ercElntag~ and time. price differential.

Annual Rercentag~. This term and Its n';)lated term'flnance charge'are significant In disclosure requirements to the consumer under Federal Truth In Lending legislation. The finance charge is the amount of all charges Imposed directly or indirectly by the creditor to the ~lJyer as an Incident to ex­t~pdlng credit. 1'},;e annual percentage rate Is,' th's percentage r;f the finance charge applied to the unpaid balance of the amount financed.

jruth In Lending does!!.Q! limit the amount of Interest or~he time price differential In a credit purchase. All the law requires Is dis­closure. The finance charge can Include: (a) Interest (or time price dtfferential) or a similar system of additional charge; (b) service or carrying charge; (c) a toan fee; (d) cost of a credit report; and (e) a premium for Insur~ ance protecting the creditor against default or credit loss. Dc not confuse the items In­cluded In this type of disclosure with Interest rates permitted under state law.

Interest. Under state law Interest charges may not exceed $8.00 on $100 for one year. To charge more Is called "usury". There are some exceptions to the $8.00 limitation. Open-ended credit transactions, such as the typical charge accolmt, may be charged a 12% annual percentage rate. DisclosUl"e under Federat Truth In Lending legislation does not require a separate itemization of the amount of Interest charged. Annual percent­age rates also need only be accurate to the nearest quarter of one percent. Hence, the dlsclos,ure required Is not particularly helpful In determining whether you a.re being charged a usurious rate of Interest.

Time Price Sales. Added to the confusion Is the so-ca\led~ price differential. This Is the cost you pay. under a retail sale lnstall~ ment contract when you buy a new or used car. The, law permits charges of $8.00 per $100 for new cars, and cars one-year old;

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". "

$1"' ,00 per $100 for cars two or three years old; $13.00 per $100 for cars older than 3 years. Do not confuse these dollar amounts with percentages. The actual finance rates would much exceed the dollars-per-hundred figures above quoted,

Balloon Payments are sometimes offered If the buyer complains that the monthly payments are too high. When this happens, the salesperson often offers lower monthly payments to meet the buyer's budget. The catch Is that the purchaser must make one gigantic final payment. Balloon payments are frequently used in sales of real estate by contract for deed. Real estate, however, Is an appreciating asset. Automobiles do not appreciate In value. Conceivably, a balloon payment at the end of a 36 month contract on a car could be more than the value of the au~ tomoblle. Avoid balloon payments, espe­cially on depreciating assets.

RENTING A HOME

Renting versus Buying

Is It cheaper to rent than to buy a home? Here· are some considerations:

1. The effective annual cost of home ~shlR as opposed to renting. Interest payments on the mortgage loan and the real estate taxes are both deduotlble 'On your income tax returns. You might find it oheaper to purchase a home than to rent.

2. Beal estate Is an app'reclatlng asset. A home purchased 10 years ago for $20,OOOf If maintained, may be worth $30,000 or more today.

Thoughts For the Renter

If you do rent, consider the following:

1. It Is not uncommon to spend 25% of your monthly Income on a II ro01 over your head. II

2. Generally, you will pay extra rent for an apartment with such extras ;lnd attractions as a swimming pool, saUna, cmd game room.

3. A cooperative landlord ~nd considerate 16

tenants are a pleasant bonus, Check them out before renting.

4. Is a long-term lease desirable? You might be renting out of necessity, waiting to buy a home. You might be transferred to another state by your employer. If these are considerations, It would .. be wise to think tWice before signing a lease binding you fOI a year or more.

!.Ip.s for Tenants.

Security deposits. Many landlords require the advance payment of $50 or $100 to secure the performance of the rental agreement. Often the reason given Is to secure against losses caused by tenant damage to the pre­mises. Every landlord now must either return the deposit to the tenant within two weeks after terminating the lease, or within that time glvewrlHen notice to the tenant of the reasons for withholding the deposit. If the landlord fails to provide the required notice within the two~week period, he forfeits any right to withhold the deposit. A landlord re­taining the deposit In bad faith can be force\..1 to pay up to $200 in punitive damages. Pro­visions in leases purporting to waive these rights are not enforceable.

Automatic renewals. Sometimes resI­dential leases contain provisions automati­cally renewing the lease for the same length of time as the original term of the lease, un~ less the tenant gives notlce to the landlord that he wants out. These provisions. are only effective if the landlord gives notice to the tenant In writing of the automatic renewal provision. Notice by the tandlord to the ten­ant must be givel115 days before the tenant is required to inform the landlord of his in­tentions to stop renting under these provisions. The notice by the landlord Is not effective if It is given 30 days before such notice is required to be given by the tenant.

Substandard Housing. Tenants living in apartments considered substandard, un­healthy or unsafe have the right to demand an inspection by lo'cal officials having the responsibility of building code enforcement. Upon completion of the inspection, the owner of the building Is Informed of any

17

violations and given a reasonable time to correct them. Until the defects are satis­factorily repaired, no tenant can be removed from possession of the premises; nor can the tenant be evlcted J or the terms of the lease changed, as punishment for exer­cising these rlghts.

Renting from Month to Month

If you do not have a written lease) chances are you rent by the month. In that event, you must give written OI:)tice before the first day of the rental period In order to terminate your occupancy at the end of that period. You are entitled to the selme notlce from your landlord. ' Examples:'

1. You rent by the calendar month. If you want to move March 31 st, you must giVE! written notice to your landlord prior t(~ March 1st.

2. Your rent is due on the 15th af each month. Your rental month thus runs through the 14th of the following month. If your land .. lord wants YOLl to move by midnight April 14th, he must give you written notice bsh>ra Maroh 15th.

If In doubt, call your lawyer.

PURCHASING A HOME

The Purchase Agreement , -

Purchase agreements or earnest money contracts should not be Signed unless you fully understand all the terms or have con­sulted with a lawyer. This contract sets the terms of the family's most Important pur­chaS9E, the home. Yet, day after day, most homel?uYEirs consult their attorneys only after signing the earnest money contract. This purchase agreement details the terms of the sale. It also binds the parties while the title Is examined and until the closing. The contract usually contains the namSs of the partles l the legal description of the property, the kind of deed to be given, the date and lo­cation of the closing, the price and terms of payment, the manner of apportioning taxes and assessments~ what personal property Is Included, and protective conditions for both the buyer and the sellar.

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known to the seller must be disclosed In writing to the buyer. If the true mileage lanot known, then tha.t fact must be disclosed. Failure to do so can be punishable under both criminal law (as a gross misdemeanor) and under civil law by Imposing triple damages. Q!!!.~g of Perishable Food

AU perishable food manufactured or pro ... c6's$ed after January 1, 1974, Is subJeot to regulations of the Minnesota Commissioner of Agriculture to assure that the product Is within reasonable limits on spoilage, drying or other deterlorf.l.tlon. The Attorney General, or any municipal or county law enforcement offici,!'\! may bring legal action to restrain vlolatlons. Gasoline Price Disclosure -- .......

Octane ratings and prices I Including fed· eral and state taxes of fuel used In motor ve­hlclest mU$t be publicly posted.· and displayed. Qr!!g Price Diselosur!

Every pharmaoy Is r(;;qulred to post the names and current prices of the 60 most often prescribed drugs. The list must be easily readable by consumers. Phone calls Inquiring about the current price ot any of these drugs must be answered. ~g Aid Purchases

Hearing aids cannot be sold without a pre­scription of an audlologlst j otolaryngologist, otologist, or licensed medical doctor. Per­sons under 60 years old may waive thfs pro .. taotlon after the law has been made known to them by the hearing aId vendor. Sales without prescriptions made to those not waiving their rights, and to those over 60, constitute violations and are punishable as misdemeanors. Disclosure Of Funor~1 E~p'enses

All funeral establishments are requIred to furnish an ItemIzed statement of the costs for the care and disposition of deceased persons In accordance wlth Board of Health rules. Further) caskets offered for sale must display the retaiFprlce on the casket. Failure to comply with these rules Is dealt with as

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unprofessional conduct and may jeot;rJrdlze the n"'~nse of the funeral director.

GARNISHMENT

fjamlshment Is the legal method of IIfreez;­logll your property or paycheck In the hands of your employer or your bank. Upon receiving a; garnishment the bank or your employer must disclose what Is owed to ydU, using a written, notarized statement for the report. Failure to do so withIn the tlm~ stilted may rt:)sult In your'bank or employer baing. liable for the amount Of your debt.

An employer cannot ffre an employee fro.m his Job unless the employee's earnings have been subject to garnIshment more than three times within a 90 day period and for more than (lne Indebtednes$.H an employer vlaw lates this reqUirement, the employee ~ant within S(') days after being fired) bring' a olvll aotlon. fur reinstatement and recover tWice his lost wages. Furthermore, under court de­cisions, only In rare Instances, (such as a default}) can garnIshment be used b€!fore a judgement 1$ obtained for the debt. This means that before gat'l1iohment ocours you mUllt receiVe noUce of the taw suit against you by service of a summons and complaint. If you ~n~wer as required by taw, you must receiVe a hearing and judgement must be entered. Seventy~flve percent of disposable eMt'1.}ngs in the hands of the employer are e)\;.~rnpt from garnishment. The exemptlon applies to earnings ill!!t all deductions re-. qulrerl by law:, to be withheld.

BANKRUPTCY

Many people believe that tttre only way cut of dlfflcutl finanCial situatlons is to fUe bankruptoy. If Your Habtllties are greater than your assetsr yo:u qualify. Yet, bankruptcy might provide no solution at all. If most Qf your debts are secured debtsl you could be worse off than before. Automobiles, televiSion sets, major appliances and home Improvements for which a mechanics Hen can be filed l are .aU secured debts. Thus, If you owe $200.00 of unsecured debts and

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$5,000.00 of secur~d debts, bankruptcy will relieve you only of the unsecured:c;lebts. The creditors on your secured debts;wlll simply take your property back. The result: No car, no TV, no washing machine. For you, bank­ruptcy may not be the answer.

Other alternatives are available. Chapter XIII of the Bankruptcy Act allows a wage earner plan, which does not carry with it the same stigma or disabilities of bankruptcy. If the plan is accepted It permlt$ a debtor to pay a reasonable amount of hIs earnings (as agreed upon) to a court-appointed trustee, who distributes the money In aocordance with the plan. It Is a supervised renegotiation of the payment schedules of an individual's debts under the guidance of, the court. Before you insist on filing ba61{ruptcy, ask your attorney whether or not yo.(i'{quallfy for a wage earner plan.

EMPLOYMENT AND COLLECTION AGENCIES

,.\~.;~'.

Both employment and colle&tlon agenCies are required to be licensed bW the Depart­ment of Labor and Industry'ql' the state of Minnesota. .

§.!!lployment Agencies

Every agency is required by iaw oOOJ3pic­UO\1Sly to display Its license in the mai'n'of.'h. flce of the agency. Look for It! In addition :"\

1. Fees canl)ot be~ccepted by an agent fo}:' simply registering an applicant for employment.

2. When a payment is made for services rendered In obtaining employment, every

. agent Is required to give the applicant -a receipt showing the name and address of the agency, the amount of payment, the date of payment and the purpose for Which payment was made.

3. Every agenoy must ~(eep a record of all ,services to both employers and employees. The Statebepartment of Labor and Industry has the authority to demand these records for inspection .

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4. If no job opening existed at the place where the job applicant was directed, the agent must refund any amo,unt the applicant paid going to and returning from the place he was sent. This must be refunded within 48 hours of demand. However, if the employer requested that the agent send the applicant for an interview, there Is no such obligation to refund.

5. Fee splitting Is prohibited. So Is false advertising and placing applicants in unlaw­ful employment.

6, If a strike exists at the place of employment and the agent knows this, he must so inform the applicant.

Collection AgenCies

These agencies also must display their licenses in the offices where the busllnesS is conducted. They are specifically prohibited from the following practices:

1. Furnishing legal advice, engaging In the practice of law, using legal stationery or forms, O! otherwise creating the appearance of judicial process.

2. Publishing lists of deptors, using IIshame" cards, or utilizing sl'Milar deVices for intimidation.

3. Operating In a iwayth.at creates the impreSSion that the agency Is associated with the federal, stat.9 i , county or local government. . '

4. Co-mingling money of a customer with .... its own operatingi:funds.

::::?~:\'.\ , HOW'TO HANDLE SMALL CLAIMS Claims up to $500.00 (not involving title to

real estate) can be heard with a minimum of. formality in the Hennepin County Canem.:. ation Court. Here Is how this small cialms court works:

1. The Clerk of Conciliation Court, Room 438, City Hall and Courthouse In downtown Minneapolis, will furnish you with a complaint form for you to complete. The Clerk will charge a nominal filing fee.

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2. The Clerk then adv'i'~es you of the date your claim will be hear~.

3. The Clerk sends ':lout a summons requiring the appearanc'e of the person (defendant) you are suing on the hearing date ..

4. The defendant, if he desires, may file a counter-claim against you.

5. Prior to the hearing you should prepare a concise outline of your claim and locate all documents and writings which support your claim.

6. At the hearing, explain the facts to the judge and show him all the documents and writings.

7. You may have an attorney present at this hearing, or you may appear on your own behalf. There Is less formality about receiving evidence In Concili~tlon Court than In other courts. Most persons appear without their lawyers. "

8. The judge, after hearIng both sides, takes the case under advisement. You are informed by mall of his decision.

9. The losing party may have his case heard all over again In the Hennepin County Municipal Court. An attorney should be obtained in that event.

FRANCHISES AND PYRAMID DISTRIBUTORSHIPS

franchising

Franchising Is a legitimate and lucrative business. Some specialty food and restau­rant chains halfe developed outstandIng rep­utations and have honest business offers for the person who can make a substantial in­vestment in time and money. However, many such operations are phony. The name and seIVic6s you buy may either be worthless or non~existent. No one can sell or offer for sale a franchise in Minnesota unless a proper franchise statement has been filed with the Commissioner of Securltles of the state,.D.e­partment of Commerce. Call him (296~2594) before you invest. fyramid Distribu,orship.s

Distributorships whose purpose Is to get 25

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yJ~ to recruit other distributors, who In turn ar¢' to recruit more distributors, have a bad track record. The person at the top of the py,ramld gets rich on your Investment. The goal of this questionable bUSiness Is not to sell products j but to obtain Investors.

The Minneapolis Better Businass Bureau Is. an excellent source of Informatlon about suoh bogus practices. Before you get too ex.cHed about such a "get rloh quick" sc,~eme, give the Bureau a calt. Other agenCies offering helpful Information about consumer problems are listed at the back of this pamphlet. Call them before acting.

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NURSING HOMES

, Recent legislation established a HSIII of 'iRlghts" for nursing home patients. These . rights are designed to insure privacy, dis­

closure, and continuity of care. This "Bill of Rights" must be posted In licensed nursing homes and must be.furnlshed to all residents on admission. .

MistreafMent, Intentional abuse or serious neglect of nursing home residents Is a crime punishable by imprisonment for up to one year or payment of a fine up to $1 _0'0'0'.0'0' Or;: both. Any suspected violation should bEf' reported to the State Board of Health. lnfrac~ tions afstate fire and safety standards should be reported to the State Department ot Public Safety. Retaliation against a patent, resident or employee making a good faith report of these vlolaUonst's' punishable. by up to 90 days In Jail or up to a $30'0.0'0 Une, or both. .

PARENTS LIABLE FOR CHILD'S VANDALISM ...

If the wrongdoer who Is under 18 years of age and lives with his parents willfully or

. maliciously injures your person or. destroys your property, his parents can be, made to pay up to a maximum of $10'0.0'0'. If the parents refuse to pay you may sue In Con~ ciliation Court Tell the/"C·dudge you are proceeding under Mlrniesota Statutes §540.18.

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CONSUMER PROTECTION AGENCIES

Here are some of the agencies ready to help you: ,'t','

Citizens Protection Division Hennepin County Attorney 248 Courthouse Minneapolis, Minnesota 55415 348~4528 (Civil complaints)

BusJness Fraud DivIsion Hennepin County Attorney 400 Courthouse" Minneapolis, Minnesota 55415 348-3110 (Criminal complaints)

Consumer Affairs Department City of Minneapolis ,:' 't05 Courthouse , Minneapolis, Mlnnesota\55415 348~4283 (General complaints),

Office of Consumer Services Minnesota Department of Commerce Metro Square Building 7th and Robert Street Saint paull Minnesota 55101 296-2.331 (General complaints)

Consumer Pr.otection Division Minnesota Attorney General 'W2 State Capitol Building Saint PaUl, Minnesota 55155 296-3353 (General complaints)

Better Business Bureau 15 South Fifth Street Minneapolis, Minnesota 55402 335·8875 (General complaints)

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HENNEPIN COUNTY GOVERNMENT

, "Bo~rd of County Commissioners ': Room 130J Courthouse

Minneapolis, Minnesota 55415

DistrlctNo.1 Commission~~r Richard O. Hanson

District No.2 Commissioner Thomas E, Ticen

District No.3 ::.:J

Commissioner Thomas L.Olson

District No.4 Commissioner David P. Lindgren

District No, 5 Commissioner E. F. (Bud) Robb, Jr.

Hennepin County Attorney c ..

GaryW.>Flakne 400 Courthouse

Minneapolis, Minnesota 55415

Hennepin County Sheriff Donald Omodt

, .. ' Room 6, Courthouse ··"Mlnneapolls, Minnesota55415

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(Not Printed at Govarnment Expense)

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